The Ramsey Show - App - When Does It Make Sense To Take a Lower Paying Job? (Hour 1)
Episode Date: February 2, 2022Career, Saving, Debt, Home Buying, Insurance, Investing As heard on this episode: Sign Up for a FREE trial of Ramsey+ TODAY: https://bit.ly/3rZTUAx Tools to get you started: Debt Calculator: ...https://bit.ly/2Q64HME Insurance Coverage Checkup: https://bit.ly/3sXwUn5 Complete Guide to Budgeting: https://bit.ly/3utmVXi Check out more Ramsey Network podcasts: https://bit.ly/3fHhbVE
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Live from the headquarters of Ramsey Solutions, this is The Ramsey Show.
It's where we help you live your best life by being healthy relationally,
successful professionally, and peaceful financially.
I'm Ken Coleman, joined by my colleague George Campbell.
We are here for you this hour.
What do you need to talk about?
It is a free phone call.
The phone number, 888-825-5225.
888-825-5225.
George will help you on those really specific, tough money questions.
I'll chime in as well.
But how about your work?
How about the shovel? How about the fact that through your income, through work,
in the hottest job economy we've ever seen, George,
you can increase the size of the shovel and get out of debt,
get that emergency fund funded, catch up on that retirement,
and keep on going, pay for college, the whole nine yards.
It all works together.
So if you're feeling stuck, i can promise you you're not
let's help you figure that out in your job stuff because george the work and the money
so the relationships and work relationships and money they're all inextricably connected
if you're off in one of those three areas it's affecting all three and that's why we do the
ramsey show yeah and when you get some help in, it really helps the other in so many ways.
It absolutely does.
So maybe later in the show, we'll see.
If time allows, George has got a new French Bulldog.
I haven't talked to him since.
We may dig into that.
That's what America needs to hear.
You get debt-free and pay off your house, and what do you do?
I don't see you on a cruise.
No.
I see you with a new French Bulldog.
You know, a cruise lasts a week, Ken.
The French bulldog, hopefully 10, 12 years if we're lucky.
That's how I see it.
It's a good ROI.
Oh, I love it.
All right, let's get to Zach in Charlotte, North Carolina.
Zach, how can we help?
Hey, guys, what's going on?
Well, we are living the dream.
What are you doing?
Well, I'm doing the same.
I'm blessed.
Thanks for taking my call.
I got a little bit of a two-part question for you i could probably ask you a million but i'm trying to be specific
so okay i'm planning a and i've been planning to create a change for the past year um i had
the opportunity to move and take this change last may and um some financial i wasn't where i was in
the middle of baby step two.
Some other things going on in my personal life, I just said, hey, let's slow down, let's pause, reevaluate.
And here we are six, seven months later, and I'm certain this is what I want to do, where
I want to be.
And so I'm looking at where I'm at in my baby steps.
I'm on pace to be done with baby step two by the middle of June slash July.
All right.
I'm getting ready to be completely consumer debt free,
and the only thing I have, the last part of that is an $11,000 student loan that I have.
Okay.
And I know from listening, you know, when you're making a big life change, making a career change, press pause, stack cash.
So I've sort of eyeballed it out that I think I can have between 13
and if I press pause in March, you know,
I'll be completely out of everything except that student loan.
If I stack up cash and I keep following baby steps like I have been instead of just throwing it on
dead saving it I think I'll have between 13 and 16k to make this move slash career change all
right so let's um so let's figure out what is this move career change and and why do you need
13 to 16,000 to make it well yeah so the the easy part is I'm transitioning from the steadiness of public education to real estate.
Okay, so selling commercial or residential?
Residential.
Okay.
Okay.
Also, I'm moving from a small town to a big city, and I know it's to be a quite the change and quite the uh financial
change as well okay so i just want to make sure i'm ultra prepared for this news okay so is this
a money question i know it's a money question but are you asking me because here's here's what i
see real estate is going to be there a year from now two years from now three years from now i i
guess i'm not hearing enough evidence.
George and I are going to tackle this with you.
But, George, I don't hear anything in here that says he needs us to pause
paying off the debt when we are, as we sit here today,
we're talking about five, five and a half months, you've got it all paid off.
And then we move into baby step three.
Yeah.
Am I right?
Well, the flip side is that I'm a school teacher,
and so part of that equation left out is last May when I decided to come back,
I said, hey, I'm going to commit to one more year at my school,
and this coming summer is when I'll make the transition.
Oh.
And so I made a year-long commitment,
and I'm not in a place where I want to make another year-long commitment to return to that same school district.
Okay, so my question is, so your salary, it's by contract, so you're not going to have salary extending through the summer?
Correct.
I'll get a couple extra paychecks, one in July, one in August.
Okay.
And I have side work and stuff.
Right.
So here's my deal.
I don't think you pause anything. Pay off the debt
because that's going to take more pressure off of you when you finally move to Charlotte, North
Carolina, and then go all in as a realtor. I'll hand it to George in a second, but let me tell
you what I know about real estate because I'm really good friends with Byron Buffini. He's been
a guest on this show. He's kind of the Dave Ramsey of the real estate training world. And he's told me unequivocally to really win in real estate, you have to go all in. So while I do understand what you're saying,
you want to pile up some cash to be able to kind of buffer that first 90 days of getting your first
house and selling it. That I understand. But George, I hand it to you because I believe
that he needs to do that,
but he only does that after he pays off the debt.
The real estate is going to be there.
So if he's got to have two or three side hustles,
I want the debt paid off before he goes full-time into real estate.
Yeah, I'm amening everything Ken said.
It feels like you're kicking the can down the road, but the better thing to do is get rid of the can so that you can focus on real estate
without any debt with a fully funded emergency fund so that you're not worried about this.
There's no reason you need $16,000 to get started in real estate.
Do you have your real estate license already?
Yes.
You do?
Just finished, actually, yeah.
Awesome.
Have you been shadowing?
I'm talking to some guys, and as far as actually selling, no.
I'm not in the city I'm moving to.
I'm about two hours away.
Sure.
So I'm focused on my three or four side gigs plus my teaching job now
plus trying to learn and mentor, but I'm not actually selling.
Perfect.
But here's the deal.
George is absolutely right.
Get rid of the can because then based off your, and I'm so glad you called,
I want to encourage you
your your heads you're you're thinking through the right stuff you're just not thinking about
the right way if we remove the debt we get all the debt out that's less money that you have to
kind of have in savings as you get yourself on your feet here this would be my exact move i'd
pay off the debt do everything you're doing now i would pay it off june you come out of this thing
debt paid off.
If you've already made the move, great.
If you haven't made the move, then you make the move.
We go get solid and stable in this new city where you're going to be a full-time real estate agent.
Okay?
If you've got to work three or four side hustles there for a while until you kind of get the apartment
or rent, all that figured out, fine.
But then you're all in.
Yeah, I would be getting getting side hustles going.
So you would think, I mean, by, say, let's say July 15th,
I could be debt-free and have $3,000 or $4,000 more coming in
over the course of the summer, go ahead and make the move then
with that money coming in.
Yes.
I'm excited just thinking about that plan.
And you can go tutor, work those side hustles.
I would love for you to be debt-free with an emergency fund by the time you
jump into this new career. And remember,
even though I'm saying yes,
if it turns out it needs to be September or October
for that move, that's fine too.
I want to make this new move
just at a nice pace. No need to be
frenetic, because your best income
days are easily
not too far in the distant future.
Thank you so much for the call, Zach.
He's George Cannell. I'm Ken Coleman. Don't move. More Ramsey Show coming up.
For a lot of you, last year was another year of just trying to survive, but you don't have to live like that. You can have confidence
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I'm Ken Coleman, joined by my colleague George Campbell.
We're here for you this hour, 888-825-5225.
You've got money questions, relationship questions, work questions that are all intertwined.
George and I are here to help you out today triple eight eight two five five two two five uh let's go to randy who's
in san luis obispo california uh randy how can we help hey how you guys doing we are having a blast
randy what's up so i uh just have a quick question. I'm familiar with like the Baby Steps program.
Got the Baby Step 1 done.
Right now, it's like a really good time to sell a car.
Like I guess the car market's really low.
So I'm in debt like $18,000 on my car.
And car payments are about $500 a month.
And I also have like $10,000 in credit card debt.
And so I'm trying to figure out if it's worth it to sell the car,
pay off that debt, and then maybe get like a,
I don't want to say a beater car,
but something that's just not as aggressive in payments or even something
that I could just pay off like for $2,000 or something.
I just kind of need some advice. If it's worth it,
should I get out of that card loan?
I mean, it's an opportunity to have $500 extra a month
to pay off the $10,000 in debt.
You're on the right track, Randy.
What's the car worth?
You said you have $18,000 in debt.
What is it worth?
I got a blue book for cash for $20,000.
Boom.
That is what I like to hear.
Originally, when I first got the car, I put $6,000 of an already existing loan into that loan.
So I feel like I'm kind of making out.
So what's your household income?
I'm at like per year or per month.
Per year.
Like $68,000.
Awesome. Awesome.
Okay, so if you sell this car for $20,000, you get rid of the loan and you have $2,000 left, right?
Yeah, so then obviously right there is an opportunity to buy another car.
Well, first the opportunity is to pay off your credit card debt.
Well, yeah, exactly.
And then with the money left over,
we're going to buy a reliable used car.
And it doesn't have to be a beater,
but we're not going to spend $15,000 on a used car,
and we're never going to go into payments again.
You said, well, maybe something with less aggressive payments.
Zero is a much less aggressive payment.
Would you agree?
Right. Yeah, I would completely agree, yes.
So go buy you a $5,000, $6,000 Honda or Toyota that'll last you a long time.
And that will then free up your income. You'll have no payments after that, right?
Yeah. What would that feel like?
With my heads out, I just know that that's going to be... So I brought it up to my boss. He's kind
of like a mentor. And he said, I know your head's up, but it's a nice car.
I wouldn't do it.
And I'm kind of like, damn it.
I shouldn't have asked him because now I'm going to ask someone who I really respect a lot.
You know what happens when broke people drive nice cars?
They stay broke.
It's so true.
And it's sad.
You make great money.
You're a hardworking guy, and you're broke.
That's the first impression.
Yeah, it's true. Yeah, but, you know, here's the deal. You make great money. You're a hardworking guy, and you're broke. It might be the first impression. It's true.
Yeah, but, you know, here's the deal.
I've been struggling.
Randy, don't beat up on yourself,
but it's the equivalent of me asking a technology question to the trainer at the gym.
He might have an opinion.
I might respect him because of his muscles and his workout habits,
but is he really a technology expert?
You called George.
George is a money expert.
And I have no muscles.
Well, that's true too.
Both can be true at the same time.
Listen, don't beat yourself up
over it just because you respect him and he had a different
opinion. What do you know to be right?
Having heard what George tell you, what do you believe
to be right? What should you do?
Honestly,
I feel like if I can get what,
especially with putting the negative
six grand from the prior loan into this car and then being able to sell for two grand more, I feel like if I can get what, especially with putting the negative six grand from the prior loan into this car
and then being able to sell for two grand more, I feel like it's practically getting a lottery ticket, you know.
All right.
You're undoing some stupid tax, which I like.
Yeah.
Do it today.
Don't think about it.
Don't ask anybody else.
Just do it.
Move forward.
We're talking about major progress here.
Let's go to Cameron next in Tampa, Florida.
Cameron, how can we help? Howdy. So I'm basically just going to explain my situation and hopefully
y'all can either knock me outside the head or, you know, say you're doing good.
Are we that aggressive, Ken? Well, if he wants us to be, sure. Okay. You tell us what you want.
It's his show, his call. So currently I'm in the market for looking for a home.
And basically the criteria that I have for a home is, I don't know if you're all familiar with the term house hacking,
but essentially you're going to live in one room, rent out the additional room,
and it should be enough to cover the mortgage on the house.
So I'm looking for a three-bedroom, two-bath, and the market is extremely aggressive.
Most people are playing far above list. I've already put in offers with, you know, 10,000 above list with a wave,
wave to price. Of course they still fit the criteria that I listed out before. Um, but I,
is this a good plan? Is this something I should pursue further? Um, because basically the only
way that I'm going to get a house at this point is to go way above over what the appraisal is going to be, and then have just
extra money that's going to be given towards the loan. Um, you know, kind of that I won't be able
to get a mortgage for. So, and so I guess basically my question goes out is how far should I extend
myself out? I am, you know, I am debt free and I do have plenty of money saved up for the house,
but is this a good idea?
How much do you have saved?
So right now it's about $32,000,
and that's just specifically set aside for buying a house.
And how much are these houses you're looking at?
My price range is anywhere from about $200,000 to $250,000.
Okay.
So this house hacking idea, I do know about it,
and it's done by a lot of the real estate investing gurus on TikTok,
and they're all pushing it, and I love that you're debt-free.
That makes me wary already.
It does, and I'm a fan of you buying the house that you can afford
regardless of who may or may not rent
and who may or may not give you the money that you want.
Yeah, can I jump in, George, before you give more financial advice?
I just got to know, are you married, single?
I need to understand, what's the purpose of buying something
that you then turn around and rent two of the three bedrooms to somebody else?
Is this straight investment play for you?
Is that the deal? So relationally, this isn't affecting your life.
No. So currently I graduated last year from Texas and then moved to Tampa for work.
I'm currently renting out an apartment. It's fairly expensive. And as I'm looking at real
estate prices and what rents are going for, you know, it's only going up and up and up.
The longer I hold on to money, the more it's going to be eaten away by inflation.
It's basically real estate's a pretty safe place to keep money.
And so it's going to be basically, you know, tackling the purpose of I have a place to put my money that's safe.
And I'll be able to, you know, live for free, essentially, is kind of the hope.
There's no such thing as free my man i'm sorry
yeah i wish there's your first myth you've been watching tiktok or these motivational morons that
are standing by jets and taking pictures and duping people like you and they're freaking you
out and scaring you that keeping your money safe is somehow stupid inflation isn't going to continue
at the crazy rate it is now. It's just not.
So Cameron, let me give you some parameters that will help because you have your own set. I'll tell
you what I would do if I was in your shoes. I would save up 10 to 20% down. You have that,
but I would do it on a 15-year fixed rate mortgage. And I want that payment to be no
more than a quarter of your take-home pay, regardless of whoever rents. Look at that as gravy on top. And if you can afford a place like that, that's less than 25%
of your take-home pay on the 15-year fix, you've got 10% to 20% down, ideally 20% or more to avoid
that PMI, then I would say, hey, this is a great idea, man. Which may mean you need to wait a few
more months, save up a little more. And right now the market is crazy and you're putting 10,
20 over asking, do not waive inspections, do not waive appraisals.
That's how you get into a mess. And it becomes, it goes from free to very expensive because you
didn't look into all the issues. So don't rush into this. You're a young guy, you're sharp,
you're doing great, but this may mean this is a three year journey for you instead of a tomorrow
thing. Not what you wanted to hear, I'm sure.
Well, I mean, you're right.
Then it's something that I was prepared for.
You know, that's kind of why I came on the call is just, like I said, to get knocked
inside the head if it was necessary.
Well, we're really not knocking you upside the head because here's the deal.
You're a really sharp guy and you're debt free and you're young and you've got enormous
financial potential. I think what I'm hearing,
Cameron, is that you're hearing some influences that make you feel like if you don't move this
money and get it into real estate now, you're really blowing it. And that's simply not the
case. George did a wonderful job of laying out what the risks are and what the myths are. So
hang tight, keep building, Keep hustling, man.
Get more money and do it in a way that's stable and do it in a way that makes the most sense.
You're fine.
Stay the course.
I don't like mixing investment property with my primary residence.
It's got its place.
But right now, you've got to focus on you, man.
You'll do fine in life.
Don't worry.
You already are.
Doing incredible.
Thank you so much for the call.
Hey, don't move.
More of The Ramsey Show right after this. All right, folks, welcome back to The Ramsey Show,
where we help you win financially, we're going to help you win professionally,
we're going to help you win relationally.
All those major areas of your life have got to be on purpose.
You've got to be moving forward to live that life that you want to live.
And we just talked about
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Married folks, I've got to talk
to you. I want you to just imagine for a moment
never having another money argument
with your spouse.
You done imagining?
I mean, that's pretty amazing. How much better
would your marriage be?
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Follow our proven money plan so you can stop fighting about money
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All right, back to the phones we go.
888-825-5225.
That's 888-825-5225 that's 888-825-5225 marissa joins us in appleton
wisconsin marissa how can we help hi thanks for having me on first of all um so i just have a
quick question for you right now i'm on baby step number two um i am a 115K in student loan debt.
And I have an offer right now on the table to take a job at the church that I go to in a really cool position that really aligns like morally what I believe in more than where I'm at right now. but it is $11,000 pay cut. So I'm just kind of looking
for some guidance on if I should take that job or if I should keep grinding out with my current job
until I'm debt-free. Okay. I'm going to ask you a series of questions and we'll dive in on this.
When do you expect, if you were not to have any interruption in your payment plan, to pay off the $115,000 student loan debt?
Yeah, so my husband and I have a really strict budget that we follow,
and right now we're thinking a little less than two years.
Okay, awesome.
Boy, you can see it, can't you?
Yeah, yeah.
We started with $180,000.
Good for you.
Awesome.
Yeah.
Okay.
Next question.
Are you willing, because this is a relationship
and you've got a life outside of
work, if you were to take,
and I'm not recommending you take the church position
yet, but if you were to take it,
and so now we have an $11,000
difference spread out over the 12
months, and I'm sure you guys have already thought about what that looks like in your budget.
Are you willing to make that $11,000 up through a side hustle so that we don't slow down at all?
So is that something that even you can do relationally or with everything else going on?
Could you do that?
Yeah.
So I actually do have three other jobs on top of my current job
um right now i make 51 000 but with my other side jobs i'm around about 60 um so i'm i am
side hustling a lot right now so i don't know if i could add any extra on my plate from what
may i be so bold as to suggest that you can't add another job four is
enough yeah all right so uh george jump in here um i'm curious to know i'm going to dive back in
a second but i'd like to i want to know we look at that budget okay and i want to know uh marissa
what is the actual impact of the budget towards debt elimination or just the budget in general if we take that $11,000 gross pay cut and we start working that out?
What's the actual hit per month and how's that slowing it down?
Yeah, so I think right now we're paying – we live pretty minimally on everything.
We rent.
We really don't have a lot of luxuries, so all of our
extra money is thrown at loans. So there's not a lot we can cut back on, like, luxury items like,
you know, HBO Max or something crazy like that because we don't do any of that stuff. So I think
the pay cut would take a little bit of a hit on just like the amount of debt we're paying each month.
Sure.
Slow it down by how much?
If we're less than two years now, how much would it slow it down?
Yeah, I would probably say potentially like $400 to $500 a month.
Okay.
Because you're losing about $1,000 gross every month.
Yeah.
I usually have about
okay i'm curious uh talking about the budget here do you guys get a refund from your taxes every
year yeah we really need to adjust our tax let's adjust that we do get we do get um a large refund
um and we're going to talk to our accountant about that but yeah we're getting a decent refund
yeah because that's that's money that will make you feel like you got a raise because you did because
that money was being hung on to by the government interest-free. So let's fix that for sure. And it
sounds like you guys are very focused on this budget. If I'm you, I'm probably keeping these
side jobs, maybe finding some that are a little more lucrative so that if you do switch to this
church position, you still have that extra $9,000, $10,000, $11,000, $12,000 coming in if you want to make that jump. Yeah, that's a great
point. I'm glad you made it. What are you in the three extra jobs? What are you making per hour in
the three different jobs? Yeah, so I make $20 an hour. One of them I make about $25 or $26 an hour.
And then one I only make like $12 an hour.
So that one I definitely could probably.
How many hours a week are you working on that one?
That one I'm only working like two or three times a month.
So it is pretty.
Okay, it is limited.
Yeah, it's not really.
All right, here's what I think is the ultimate question, George, on this one.
I think it can be done.
I think it comes down to, is this church position that is open and it's come to you,
is it the right step into where you eventually want to be,
or is it more of, and there's nothing wrong with either or on this, but is it more,
I love my church, it's a really cool job,
I would like it more than my regular day job,
and I really would like to take it.
Is it strategic, or is it just kind of cool and kind of good?
Yeah, I think I can kind of give you a little insight.
So I played soccer in college i'm one of my jobs is
a soccer coach so this position would be kind of like starting a uh youth athlete program at a
church um and like starting it from ground zero so there's like no foundation that's been laid yet
um and so it in my ultimate dream is to open up like my own training facility for youth athletes
um so this is very strategic line a little bit but what lines yeah a little bit i think where's
your husband on this what's his what's his take um yeah my husband is i mean i mean he's supportive
um but he just wants to make sure that you you know, I'm making the right decision.
He kind of, he is like a huge fan of you guys.
Like, he actually is the one that kind of showed me to you guys.
But he kind of said, as long as it's like a line where you want to be within five to ten years, he definitely supports the decision.
But he wants to make sure that it's something that, you know, is going to put me in a path that I want to be in.
Well, it's definitely putting you on a path.
I'm still not, I'm getting there.
I'm getting there, George.
I'm getting closer.
I want to know what George thinks, too.
He's warming up.
I'm wondering if your husband could take on a second job.
Yeah, so my husband actually bartends on the weekends as well.
You guys are amazing.
All right, so here's the deal.
I want George to weigh in.
I'm going to go real quick.
All right, sure.
I don't think there's a right or wrong here.
I didn't get a clear answer.
Is it about a six-month delay in paying off
or a four-month delay
if you were to take the pay cut with the church?
Did you decide?
Do you know?
Six months, about, probably.
Okay, so here's the deal.
George, if they can really do it and it delays it six months and she feels like it is the absolute best opportunity to put her on the path she wants to be on and she can't get it anywhere else, then I'd say I'd bite the bullet and make the slight sacrifice.
But if there's another way, here's the challenge, if there's another way for her to get on that path, I'd say stick it out,
don't take the pay cut, find the other way. Yeah, my gut says if you can do this and not
slow down the baby steps, I'm all in. And that might mean a lot of long nights and long days,
but man, you're going to look back in your dream job, debt-free in two years, because you've already
been on this path for a while. I don't want to extend this thing out for four years total. So
I want you to get rid of this debt, do whatever it takes, and have your dream job.
And I'm not saying don't take it. I'm just saying this church job is not the only way to get where you want to go. So this needs to be a good money decision because the career thing, it'll take care
of itself. Appreciate the call. You're awesome. You're going to do some great, great things in
the community through soccer. All right. This is the Ramsey Show. More coming up. Don't you dare move. Welcome back to the Ramsey Show.
We're helping you win in your life financially, relationally, professionally.
I'm Ken Coleman, joined by my colleague George Campbell.
We're thrilled to be with you.
The phone number to jump in is 888-825-5225, 888-825-5225.
San Antonio, Texas is where we go next.
Noah joins us there.
Noah, how can we help?
Hi.
I had a question about life insurance.
So I took out a policy via Dave's advice.
It was around the baby steps and the whole financial piece to my parents, all that good stuff.
So I took out life insurance for a term policy for the suggested amount and guideline and all that stuff.
But then I saw another life insurance policy or, I guess, company that invests the money that you make
or the money that you make as payments, you know, obviously towards your, uh,
your insurance, the life insurance. So, uh, instead of like,
instead of you not getting anything out of it other than life insurance,
that's done, you know, your family's protected,
but all that money that you made in payment, you know, it was just, you know,
you know, quote unquote down the drain.
So I wasn't wondering if I should just keep the same policy
or if I should switch over and go with this company that invests the money
that they'll make as payments over the term, which brings the interest.
Got it.
Now, how old are you?
24.
24.
All right.
This is an age-old trap that's been around for a long time,
and what you're describing is whole life insurance.
And if you've watched FPU, you know why we hate it with a burning, undying passion.
And here's the reason.
You pay a lot more money, and guess who makes that money?
The guy who sold you the whole life insurance.
And so that is why they sell it.
They make very little from term life because the premiums are so small.
And here's the easiest way to explain it.
Your insurance is insurance and your investments are investments.
Whole life tries to do both and really does neither of them very well.
And so when you say, I want this money to make money make money remember that's not the purpose of insurance
the purpose of insurance is to protect you it costs you money and i want your investments to
be separate well you can do that that's baby step four we're investing 15 of our income
to 401ks iras great investment vehicles that can grow tax-free if you've got the roth option
so those are what i would focus on if you want your money to make money, but leave your insurance as insurance to protect you. Okay. Yeah. I was
confused because it advertised as term. So I was like, I wasn't sure. I was like, that's not.
No, term will not do that. Term insurance is not going to invest for you. So if they're labeling
that as that, there's probably some fine print there you got to look into. It's probably secretly a whole life policy that they're
labeling differently on purpose so that you fall for it. Don't fall for this, man. Stick to the
plan. You've done well. Excellent. Let's go now to Seattle, Washington, where Alex joins us. Alex,
how can we help? Hi. Thanks for having me on. You bet. I'm calling because I recently sold... I bought a house last year, which is my primary residence,
and I sold the last house I was living in, and I ended up with about $100,000 in cash.
I have the mortgage on the current house that I live in. I have two rentals and I have mortgages on
the rentals. Um, I make about $97,000 a year from my job and I make about 24,000. I cashflow about
$24,000 on the rentals. Um, my expenses are $3,000 a month. And one of the questions, the first question that I have
is should I snowball the rentals, the mortgages on the rentals as debt as they are? Great question.
What's left on your primary residence? $400,000. Okay. And what's left on the rentals? $83,000 on my lowest
one and then $170,000 on the other one. Okay. So we've got a total of what, like $213,000 on the
rentals? Yeah. No, $253,000. $253,000. My bad. So here's what i would do if i was in your shoes i'm gonna pay off my
primary residence first and then i'm gonna attack the rentals with a vengeance and yes
you can attack them in the debt snowball order there uh if you want that feels like it would
make you feel the most progress once you've got the paid off primary residence. But I want you to attack the primary one first.
Okay.
I know that's the big one, right?
That is the big one.
And I've been feeling like just taking the money that I have in savings and putting it on the lowest one that just feels right.
I mean, if you want to knock out the first rental to free up that payment
that can then allow you to do the others, that's okay.
But the reason is the safety I want you to have in your primary residence.
If the bank comes after you, I want you to be able to live in your house versus selling off your rental.
All right, so I hear you, George, but I'm also over here with Alex.
I'm going, all right, he's got $100K in the bank.
Did you say one of the rentals was $83,000 you owed?
Yes.
How much is that one worth if you sold it?
$450,000.
Oh, Georgie boy.
That's big money.
But is he willing to sell it?
I don't care if he's willing.
He needs to. Because all of a sudden
you pay that off
and then that allows you to make a huge chunk on your primary residence
that George is talking about.
That's huge.
Are you willing to do that?
Are you willing to pay off that lower rental, sell it,
and then take all of the profit from that and put it on your primary residence?
No, I don't think so.
I think I would rather snowball that money because I want to leave my job. I don't think so i think i would rather snowball uh that money because i want to leave
my job i don't like my job oh no hold on a second you just riled up ken coleman now hold on a second
you've awoken him and i i but are you does that mean when you leave your job what does that mean
you're just gonna you're gonna live off of the the the houses what what's the plan when we leave the job we don't like? The rentals will provide
enough income for me. Once a house, my primary residence is paid off and those rentals
are rented out, providing the income. So that income is one thing and it'll allow me to do,
you know, other kinds of work. How many years before you pay off yeah but how many years
is that talking a long time um if i pay off if i snowball what i have right now i could pay off
the first rental right today i know i could pay off the second rental in about 30 months
yeah um so under three years and then looking at that money this is just snowballing
this isn't paying
much of other stuff I got kids colleges
and things but I could have
my primary residence paid off in
eight years
eight years after
yeah I know it's a long time
to stay in a job you hate
versus might I just challenge you.
If you do what I suggested and pay off the first rental and sell it and apply that huge number to the whole snowball that you just laid out,
you can leave that job you don't like a whole lot faster.
And I know you're minus one rental.
That's only about, what, 10, 12K in income on that first rental.
Yeah, that's not enough.
It's not a game changer.
That's not a game changer. That's not a game changer.
It's not enough for you to thrive and survive on.
I just think you need to think about this.
Being in a job you can't stand for eight years to ten years,
that's going to have all kinds of effects on you.
I don't think you can stick it out.
So what did you use?
Well, it provides all the – there's no job satisfaction.
It provides plenty of money, and it provides –
But you can't live off $24,000 a year, which is what you told me the rentals bring in.
That's the cash flow.
So that would go up.
Right, but you'd still have to work somewhere else.
Here's the thing.
You need to knock this debt out, and you can always get back into the rental business and cash flow it.
You need to be debt-free.
It's going to give you so many options.
But slugging it out in a job that has no fulfillment for 8 to 10 years just because you want to hang on to two rentals,
it's not going to take care of you in the long term anyway.
So I think you fast-forward the dream.
I think you get rid of the one rental, sell it, apply the 400 or whatever the profit is after all the real estate and everything else.
Put it on the house.
Get out of debt.
Fast-forward everything.
And then you can start buying investment property with cash because you don't have any debt.
Exactly.
Love the plan.
I just would fast forward yeah hey i want to thank our producer james
childs uh actually ben hilsen and our associate producer call screen kelly daniel george camel
and you america thank you for joining us this is the ramsey show This is James Childs, producer of The Ramsey Show.
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